Many people believe a college education is necessary for good employment (and with college graduates do have a lower unemployment rate). With that in mind, many parents are concerned about the costs of a college education for their children. College cost concerns are a genuine issue, and with tuition rates appearing to rise every year, parents need to be prepared and start budgeting both before and during college. Below are some considerations parents and students need to take into account.
- Start saving early. The average cost of a college education is currently about $20,000 per year on tuition plus expenses. Even though your child is likely to be eligible for some sort of grant or scholarship, it may be best to plan on the maximum amount. If you are looking at a private institution, that amount rises to about $35,000 per year.
Several bonuses in the tax code – 529 Plans and Coverdell Education Savings Accounts (ESA) – can go a long way in setting money aside for college.
- Get the breakdown. Find out the specifics of costs for school from the institution, and contact their financial aid office for what they offer in scholarships and grants. Also, contact the department for your child’s major directly – some scholarships may be obtained directly through applying to the department rather than financial aid.
- Know the extra expenses. Room and board, books, club fees, etc, may not always be included in that “other” category. A new computer may also need to be in the budget.
- Know the travel costs. Regular visits home or to the campus need to be factored into the equation as well. Gas, hotels, meals, etc can add up.
- Do the online homework. Both you and your child need to be engaged in understanding how to purchase items such as textbooks from somewhere other than the school bookstore, where prices may be inflated.
- Look at your other children. Some money-saving options may be available if you have multiple children attending the same school. Purchasing a house for two or more children to live in (and getting some rental money from friends) may actually be a money-saver in the long run. Consider some purchases – such as furniture or cars – which may be passed down from child to child as each one attends school.
- Do it early. College budgeting needs to be considered as early as possible. Several tax-free savings accounts can be started as early as birth for college and education expenses.
- Talk to parents who have recently put their children through college or currently have children in college. Experience is an excellent teacher, and you can find out some of the unexpected expenses simply by asking those who have already been through it.
Preparing for college expenses can be both scary and exasperating as the bills appear to pile up, particularly when they are added onto the other expenses of regular life. The most important key is to get prepared early and ask questions – and find out what questions you need to ask.
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